Revenue declines, but the mood is upbeat at Viacom

Viacom, hampered by ratings shortfalls at Nickelodeon and an unfavorable film release schedule at its Paramount studio, on Thursday reported a 16 percent decrease in revenue in the fourth quarter of 2012, a steeper drop than analysts had anticipated.

But the company's profits came in slightly ahead of expectations, and the chief executive, Philippe Dauman, pleased Wall Street with positive news about Nickelodeon and Viacom's other cable networks.

Dauman said the company was making an “unprecedented investment in content” that was paying off for Nickelodeon. The drastic ratings declines that began in late 2011 are moderating, and new shows are premiering. Dauman said the ratings momentum “confirms our view that our significant and sustained investment in fresh, original content is working, and will continue to drive future ratings growth and revenue improvement.”

Viacom reported revenue in the fourth quarter of 2012, its fiscal first quarter, of $3.3 billion, down from $3.95 billion in the same quarter a year ago. Analysts had forecast $3.48 billion in revenue.

Profit rose to $470 million, or 92 cents a share, compared with $212 million, or 38 cents a share, in the same quarter a year ago. But the year-ago quarter was hurt by a settlement with the original shareholders of Harmonix Music Systems, the makers of the “Rock Band” video game series.

After adjustments, Viacom earned 91 cents a share in the quarter, a penny higher than analysts had predicted, from $1.06 in the same quarter a year ago.

The company's stock closed up 1.72 percent, at $60.35.

The damage done by Nickelodeon's ratings drop was evident in the total revenue for Viacom's cable networks, by far the biggest part of its business. Revenue dipped 2 percent at the networks overall, largely because advertising revenue decreased 6 percent, even as affiliate fees paid by cable and satellite distributors grew.

Dauman said on a conference call with analysts that the “lingering effects of the ratings softness” at Nickelodeon masked growth elsewhere at the cable networks. Excluding its children's channels, Viacom's networks group “returned to positive ad growth in the quarter,” he said.

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